LIVE MARKETS-Amundi Investment Institute sees tariffs cutting growth, raising inflation

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AMUNDI INVESTMENT INSTITUTE SEES TARIFFS CUTTING GROWTH, RAISING INFLATION

Tariffs have the potential to reduce economic growth by 0.2%-0.3% and increase inflation by about 0.3% in countries imposing the tariffs as well as the countries affected by them, according to a note from economists at Amundi Investment Institute lead by Mahmood Pradhan, head of global macroeconomics.

Trump said on Monday that he would announce reciprocal tariffs on all countries that impose duties on U.S. goods after he stunned markets with his decision to impose tariffs on all steel and aluminium imports beginning on March 12.

In Europe, growth could be reduced by around a quarter of a percentage point to 0.8% in 2025, according to Amundi, which writes that Europe may look to limit the risk of a wider trade war. While some EU leaders will look to negotiate with Trump it said "the outcome of such negotiations is very uncertain."

"The US-EU relationship will remain unstable, with EU leaders facing a mix of intimidation and cooperation," according to the note.

(Kanchana Chakravarty)

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